Asia and Global Financial Governance

The remarkable growth of Asian economies and their integration in global trade and finance has given them considerable potential clout in international forums and institutions. However, Asia's influence in the International Monetary Fund and the Group of Twenty (G-20)—the most important institution and decision-making forum in global finance, respectively—is not yet commensurate with its economic weight. Henning and Khan find that this is partly the result of a conscious choice by Asian countries to keep the Fund at arm's length, reflecting the bitter memories of the Fund's role in the 1997–98 Asian financial crisis and more recent disputes over surveillance. But it is also due to the fact that Asia has not, at least until recently, asserted itself in global financial circles. There are welcome signs now of Asia doing so, demanding greater voice and representation through increases in quota shares in the Fund. Given Europeans' resistance to further reducing their quotas and votes, however, Asian countries will need to persist, establish unified positions on matters of regional and systemic importance, and lead a substantive agenda for the Fund. Playing its rightful role in the Fund need not detract from Asia's existing regional financial arrangements, including the possibility of eventually creating an Asian Monetary Fund. Within the G-20, Asia should seek to form common ground and coalitions with other members, and the Asian members of the G-20 should seek out and reflect the views and concerns of Asian countries that are not members of the G-20. These two actions could both strengthen the position of Asian countries in the G-20 and give voice and a stake to all Asian countries.